How do farms finance pre-harvest input costs?

A USDA Farm Service Agency (FSA) operating loan is purpose-built financing to cover the costs of running a farm — seed, fertilizer, fuel, and labor — during the season before harvest revenue arrives. Source: USDA FSA — Farm Operating Loans.

Farming runs on an inverted cash cycle: the big input costs — seed, fertilizer, fuel, equipment, and labor — come months before the revenue, which lands at harvest or sale. Operating financing bridges that gap so a grower can plant and tend the crop without depleting reserves, then repay once the harvest is sold.

A business line of credit provides flexible operating capital drawn through the season and repaid at harvest. Equipment financing covers machinery, using the equipment itself as collateral. SBA loans can also fit larger or longer-term ag financing needs where eligible.

Line up financing before the planting/input season so funds are available when you buy. Ag lenders look at the operation's revenue history, the crop and season timeline, and — for FSA programs — specific eligibility criteria.

The SBA notes agricultural enterprises may be eligible for certain SBA financing in addition to USDA programs, typically for larger or longer-term needs beyond what a seasonal operating loan or line of credit covers. Source: SBA — Loans.